MEMBERS of the United States Congress have raised national security concerns over the proposed £4 billion takeover of P&O by Dubai Ports World.

The deal, which would give DPW control over ports in New York, New Jersey, Baltimore, Philadelphia, New Orleans and Miami, is seen as a test case for Arab investment in the US.

Legislators in Washington are planning to launch a congressional investigation, citing concerns over the United Arab Emirates’ history as an operational and financial base for the September 11 attacks on America. In addition, at least one company is also preparing a legal challenge to the deal.

Critics of the deal point out that one of the September 11 hijackers drew money from bank accounts from the UAE to fund the operations, while another, Marwan al-Shehhi, was a UAE citizen.

The UAE has insisted that it is an ally in the war on terror and has handed over suspects to the US.

Condoleezza Rice, the US Secretary of State, said last week that it was “the considered opinion of the US Government that this (deal) can go forward”. She pledged to work with Congress because “perhaps people will need better explanation and will need to understand some of the process that we have gone through”.

However, Lindsey Graham, a Republican Senator, described the Administration’s decision as “unbelievably tone deaf politically”. He added: “Most Americans are scratching their head wondering why this company, from this region, now.”

Hillary Clinton, a New York Senator and front-runner for the next Democratic presidential nomination, is threatening legislation to block the take-over, saying that “our port security is too important to be placed in the hands of foreign governments”.

Charles Schumer, a Democratic Senator, has called on President Bush personally to “override the agreement and conduct a special investigation into the matter”. He was joined at a press conference by family members of September 11 victims, including Peter Gadiel and Bill Doyle, both of whom lost their sons in the attacks.

Mr Gadiel said: “I’m a lifelong Republican and I think the President’s gone insane.” Mr Doyle said: “We’re not securing our country in any way by selling our ports to foreigners.”

Peter King, a New York Republican Representative and chairman of the House Homeland Security Committee, said the takeover terms were insufficient to guard against terrorist infiltration.

“I’m aware of the conditions, and they relate entirely to how the company carries out its procedures, but it doesn’t go to who they hire, or how they hire people,” Mr King said.

“To me they don’t address the underlying conditions, which is how are they going to guard against things like infiltration by al-Qaeda or someone else? How are they going to guard against corruption?” Michael Chertoff, the Homeland Security Secretary, said he would welcome a congressional review. He said: “There is a legal process Congress created for a committee to sit and review this. We look at these transactions.”

Although he declined to address specifics of the deal, including whether it has been finalised, he described the process as “very thorough” and said that “necessary conditions or safeguards have to be put into place.” He added: “We have to balance the paramount urgency of security against the fact that we still want to have a robust global trading system.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive